The U.S. Infrastructure Act, which was signed into law in November, would require financial institutions and cryptocurrency brokers to report additional information, but the provision could reportedly be delayed.
The U.S. Treasury Department and Internal Revenue Service may be reluctant to force crypto brokers to collect information on certain transactions starting in January 2023, according to people familiar with the matter, Bloomberg reported Wednesday. According to reports, the potential delay could impact billions of dollars related to capital gains taxes — the Biden administration’s previously estimated government budget for fiscal 2023, and changes to crypto tax rules could reduce the deficit by about $11 billion.
Under the current Infrastructure Act, Section 6050I requires cryptocurrency brokers that process digital asset transactions over $10,000 to report to the IRS that their personal information may include the sender’s name, date of birth, and Social Security number. The requirements, aimed at closing the tax gap, were due to take effect in January 2023, with companies reporting to the IRS starting in 2024.
“The delay is sensible,” Jake Chervinsky, head of policy at the Blockchain Association, said in response to the news. “We are getting closer and closer to the effective date of the tax provisions of the Infrastructure Act, and we are still awaiting guidance or rulemaking on implementation.”
If true, this is good news.
We are getting closer and closer to the effective date of the tax provisions of the Infrastructure Act, and we are still awaiting guidance or rulemaking on implementation. We’ve also seen legislative proposals that could make significant changes. Procrastination is wise. https://t.co/m7bMDiVFFU
— Jake Chervinsky (@jchervinsky) June 29, 2022
Related: Crypto Miners Exempt from IRS Reporting Rules, U.S. Treasury Confirms
Since the passage of the $1 trillion infrastructure bill, many industry experts and lawmakers have argued that the reporting requirements for cryptocurrency brokers are too broad, placing an undue burden on individuals who may not have the necessary trading information. In June, cryptocurrency and blockchain advocacy group Coin Center filed a lawsuit against the Treasury Department, claiming that tax reporting requirements could “enforce a system of mass surveillance on ordinary Americans.”